When does the problem of adverse selection arise in any market?
The problem of adverse selection becomes prominent when a seller is unable to obtain reliable information from a number of buyers. In insurance, adverse selection can happen if high-risk persons insure themselves more heavily than low-risk persons.
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The change illustrated in the figure above is part of the transmission process of the Fed's monetary policy
As a result of the increase in the supply of loanable funds, in the short run aggregate demand ________, aggregate supply ________, and potential GDP ________. A) increases; does not change; does not change B) increases; increases; increases C) decreases; increases; increases D) increases; decreases; decreases E) decreases; decreases; decreases
The multiplier effect suggests that:
A. spending $1 increases GDP by more than $1. B. spending $1 increases GDP by less than $1. C. saving $1 increases GDP by more than $1. D. spending $1 decreases GDP by more than $1.
If M is 2,000, Q is 1,000, and P = 6, then V
A. Is 2. B. Is 3. C. Is 6. D. Is 12.
An increase in nonlabor income while holding the wage rate constant
A. rotates the budget line in along the leisure axis. B. rotates the budget line in along the consumption axis. C. rotates the budget line out along the leisure axis. D. rotates the budget line out along the consumption axis. E. shifts the budget line up while maintaining the same slope.